Calcutta, June 6: After a gap of four years, Williamson Tea Assam (the erstwhile George Williamson) is returning to the Khaitan fold.

The Khaitans have clinched a deal with Philip Magor, chairman of Williamson Tea Holdings plc (WTH), to buy out the latter's 70 per cent stake in Williamson Tea Assam for Rs 168.66 crore ('21.35 million).

The deal has also signalled the end of the rift between the two families, which had close links in the tea businesses in India. Philip Magor will continue to be on the board of Williamson Tea Assam (WTA) as long as he wants to.

Back in 2001, Magor broke up his business relationship with the Khaitans. He departed from George Williamson, which was later renamed Williamson Tea.

Philip Magor is now keen to rope in the Khaitans as a joint venture partner in his Kenyan tea operations - Williamson Tea Kenya Limited. With its head office in Nairobi, the Kenyan outfit produces 14.5 million kg of tea.

The Khaitan buyout of Magor's stake in Williamson Tea Assam will be executed through McLeod Russel India Ltd (MRIL), the bulk tea company in the B.M. Khaitan group.

MRIL will indirectly acquire the majority stake in Williamson Tea Assam. This acquisition will be made through a buyout of 100 per cent share capital of Borelli Tea Holdings, UK from Williamson Tea Holdings of London. Borrelli holds 70 per cent of Williamson Tea Assam.

MRIL has offered a value of Rs 170 per share. The paid-up capital of WTA is Rs 14.17 crore. ICICI Securities is advising MRIL on the transaction.

Philip Magor has been advised by John Riddick of a legal firm called Pennington, located in Newsbury. MRIL does not rule out a merger of WTA with itself at a later stage.

The acquisition will be financed through a mix of external commercial borrowings and through internal accruals. MRIL is talking to banks and fund managers across the globe to finance the deal. The Khaitans will make an open offer to acquire up to 20 per cent of WTA shares. The price of open offer could be Rs 170, or last six months' average price or the last two weeks' average, whichever is higher.

WTA has 17 gardens in Assam and an annual production of 20 million kg. With this deal, MRIL will produce 42 million kg of tea, becoming the world's largest integrated tea company. Its annual output will be 62 million kg of bulk tea.

Deepak Khaitan, executive vice-chairman of MRIL, said from London: “Two weeks ago, Magor and I sat down to discuss the acquisition. He agreed to my proposal. Our group has been managing these gardens for decades and we are happy to bring it back into our fold. It makes immense business sense as we can rationalise costs and continue to offer our customers best quality."